Smithsonian Governance Study Excludes Input from Museums

The Smithsonian board appoints mostly its own members to its governance review committee, in sharp contrast to the approach taken by the American Red Cross. 

Now that the clamor has subsided about the resignation of Lawrence Small as secretary (CEO) of the Smithsonian Institution (EIN 53-0206027 Form 990), it's worth taking a look at what the institution is doing about governance reform.  So far as I can tell, only the Chronicle of Philanthropy (Suzanne Perry) reported specifically on the governance review committee, behind subscription walls. 

The regents put together a committee of mostly its own members, chaired by Walter Massey, president of Morehouse College in Atlanta (EIN 58-0566205 Form 990).  The other members are:

• Rep. Doris Matsui (D-California),
• Robert Kogod, wealthy DC philanthropist and just coincidentally one-time trustee of American University (from 1978-1993, before the term of former AU president Benjamin Ladner, who had his own troubles with Senator Grassley over compensation)
• Patricia Stonesifer, executive director of the Bill & Melinda Gates Foundation (Link to Form 990 found here)
• Diane Aviv, head of Independent Sector (EIN 52-1081024 Form 990), the only member of the panel who is not a member of the board of regents

This committee represents a quite different approach than that taken by the American Red Cross (EIN 53-0196605 Form 990) when faced with a similar challenge by Senator Grassley to review corporate governance.  We noted in this piece (November 1, 2006) that the Red Cross chose a committee completely of outsiders, with heavy representation by high profile corporate types, not experts in nonprofit institutions: attorneys, the head of the Harvard Business School, and a former counsel for institutional investor TIAA-CREF.   The product was a 160-page report American Red Cross Governance for the 21st Century that provided detailed justification for major changes in governance. 

More of that kind of high-profile, completely independent review would be welcome for the Smithsonian, too.  And rather than outside help from Independent Sector (which to my mind represents more the perspective of foundations rather than working nonnprofits), it seems to me that, as a museum, the Smithsonian could particularly benefit from the perspective of the American Association of Museums (EIN 53-0205889 Form 990), just a few blocks away, which includes accreditation of museums among its programs and publishes governance standards. 

The Chronicle of Philanthropy quoted Ms. Aviv questioning the board's defense of Mr. Small before his resignation, saying that retroactive approval of certain expenses created a public perception that the board had "moved their goal post" and "approved behaviors that would be widely regarded as unacceptable practices."  While that is no doubt true, I am wary of using a vague standard like public perception as a basis for corporate governance.  Organizations are better served by the systematic approach of an accrediting body of real live insititutions like the AAM.

As an overall solution for both national nonprofits—the Smithsonian and the American Red Cross—I think Congress should consider appointing a completely independent high-level visiting committee periodically (say, every seven years) with a charter and budget to conduct a wide ranging review of these institutions, which would of course include some form of public input as well as professional peer review.  In effect, it would be a high-level public accreditation for these organizations.  Just the knowledge that there will be an occasional outside look would make the boards of these institutions more cognizant of what their stewardship really entails. 

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